Its not that it looks like your losing muscle, its just that at your body weight and fat percentage everything I've read before on the subject tells me that you would be losing some muscle, but hey if you feel good about you look and feel good doing it, thats all that really matters right? Everyone usually will lose some muscle when on a very strict cutting diet, which for the finishing results in my opinion is worth it. So keep doing it. As for a carb up day, just include a higher percentage carbs in all your meals, instead of say 30% which you may be doing now go as high as 45% or whatever gives the results, play with it a little, you should notice your muscles fill out a bit after that as if you are going 3 days low carbs they will flatten out a bit, its definately my favourite way to cut down. I zig-zag my calories as well and make my carb up day the same day as my high calorie day so you a a little more room with the quantity and quality of what you eat.